Royal Oak Schools trims projected structural deficit in budget amendment
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Summary
Board approved a general fund amendment that reduces a projected structural deficit from $4.8 million to $2.5 million after updated audited figures, certified FTE increases and special-education reimbursements; trustees discussed fund equity and contingent grant funding tied to pending litigation.
The Royal Oak Schools Board of Education voted Dec. 11 to approve General Fund Amendment No. 1, which narrows a previously projected structural deficit and reconciles updated revenues and grants.
Ms. Isabella presented the amendment, saying the district closed 2024–25 with an audited deficit "just over $51,000," and explaining the original 2025 budget included a structural deficit of $4,800,000. After updated enrollment figures and state adjustments, the amendment shows a structural deficit of $2,500,000.
Key revenue changes cited by district staff included an audited increase of 46.21 certified full-time-equivalent students (presented as equating to about $1.1 million in state funding), a prior-year special-education cost report adjustment of $730,000 and an additional PA 18 payment of $224,000 from Oakland Schools. Ms. Isabella said federal grants were also reconciled to reflect actual awards and that salary and benefits comprise roughly 77% of district spending.
The superintendent and staff noted one state grant item — identified in the meeting as the 31AA school-safety and mental-health grant — is the subject of pending litigation because one provision would require participants to waive attorney-client privilege for certain investigations. Superintendent Dr. Topolski said acceptance of the roughly $600,000 award was "tentative" and that if a court rules the waiver requirement is required, the district would decline the funds to avoid legacy costs tied to one-year grant funding.
Trustees asked about the district’s fund equity percentage; preliminary estimates discussed during the meeting ranged from about 15% to 18% depending on whether the calculation uses revenue or expenditures as a base. Finance staff said they expect to refine estimates in a second budget amendment in the spring after the heating season and other costs are clearer.
The amendment passed by voice vote. Trustees and administrators said no services or programs will be cut as a result of the amendment, and staff were assigned follow-up work to publish revised financials and to prepare a spring amendment if necessary.
